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Except for pharma, all other sectoral indices ended in the red with Nifty Bank, Auto, Energy, FMCG, Metal and PSU Bank down 1-3 percent.
Telecom companies will be at the focus as Prime Minister Narendra Modi launched the 5G telephony services that promise to provide ultra high-speed internet on mobile phones.
The U.S. dollar index fell 0.12% to 122.10, while the yen firmed at 144.79. Dollar/yen has held steady below the 145 level following an intervention by Japan to shore up the fragile currency.
Rising interest rates dim bullion’s appeal as they increase the opportunity cost of holding the non-yielding asset. Euro zone inflation zoomed past forecasts to hit 10% in September, a new record high that will reinforce expectations for another jumbo interest rate hike next month from the European Central Bank.
“Right now, I would say FMCG, cement, banking and auto would be the go-to places. IT is going to get hammered again, post the results. So, IT is a no-go zone.”
Overall shorts are coming out of the system, short-covering action is there in the market today, and we expect that upside momentum is likely to continue in the coming trading session. So, one should remain long with a stop loss, as mentioned, like 16,950 for Nifty and 38,400 for Bank Nifty.
The rate hike was decided by a majority of 5 out of 6 members. The policy pegged India’s GDP growth at 7% during the financial year 2023 and maintained inflation at 6.7% for the same period. Going forward, RBI will remain resolute and continue with its efforts to ensure price stability as well as financial stability, while supporting growth.
On Friday, RBI announced another 50 basis points increase in its benchmark repo rate, which is likely to be passed on by banks to individual borrowers just like it has been over the last five months. As a result, home, car and loans for personal consumption are set to get costlier. One basis point is 0.01 percentage point.
The government’s fiscal deficit at the end of August was 32.6% of the full year estimate, in line with 31.1% deficit last year during the same period. In absolute terms the fiscal deficit for April-August was ₹5.41 lakh crore.